Downing Street transcript of the joint conference held by the prime minister, Tony Blair and the US president, George Bush, at the Foreign Office.

Prime minister: Good afternoon everyone. First of all can I extend the warmest possible welcome to the president of the United States and to the first lady to Downing Street, and say how delighted I am to see them both here. And as you would expect, I think, I would like to say some words about the latest terrorist outrage that has occurred today in Turkey.

First of all I would wish to express my deepest sympathy and condolences to the families of the victims, some will be British, many will be Turkish citizens, I would like to express my condolences also to the government and to the people of Turkey

And once again we are reminded of the evil these terrorists pose to innocent people everywhere, and to our way of life, once again we must affirm that in the face of this terrorism, there must be no holding back, no compromise, no hesitation in confronting this menace, in attacking it wherever and whenever we can, and in defeating it utterly.

It should not lessen, incidentally, in any way at all our commitment to Iraq. On the contrary, it shows how important it is to carry on until terrorism is defeated there as well. Because it is in a free, democratic and stable Iraq that not just the violence, but the wretched and backward philosophy of these terrorists will be defeated and destroyed.

Yesterday, as some of you will have heard, the president of the United States delivered a powerful, telling speech extolling the virtues of freedom, justice, democracy and the rule of law, not just for some people but for all the peoples of our world. Today the fanatics of terror showed themselves to be callous, brutal murderers of the innocent, and the contrast could not be more stark.

There may be some who think that Britain would gain from standing back from this struggle, even some who believe that we, and the United States, and our allies have somehow brought this upon ourselves. Let us be very clear. America did not attack al-Qaida on September 11, al-Qaida attacked America, and in doing so attacked not just America, but the way of life of all people who believe in tolerance, and freedom, justice and peace.

May we issue for you, in the light of this latest outrage, a short summary on the casualties and cost of terrorism. It is quite interesting to see just how many countries have been affected, what the cost of terrorism is, how many thousands of people have died over this past period of time. Many of the victims, incidentally, are Muslim people, not least the civilians murdered in Iraq. So this is a time to show strength, determination and complete resolve.

This terrorism is the 21st century threat. It is a war that strikes at the heart of all that we hold dear, and there is only one response that is possible or rational: to meet their will to inflict terror with a greater will to defeat it; to confront their philosophy of hate with our own of tolerance and freedom; and to challenge their desire to frighten us, divide us, unnerve us with an unshakeable unity of purpose; to stand side by side with the United States of America and with our other allies in the world, to rid our world of this evil once and for all.

In the course of the discussions that President Bush and myself had yesterday and today, we also of course discussed many other issues, and let me just run through a few of those with you. There will be two communiqués put out afterwards, one on Iraq, one on the other issues we discussed, and I can just simply list them for you. Obviously we discussed the situation in relation to the WTO and world trade and the issues to do with steel, with which we are familiar. We agreed a special joint task force on the issue of HIV-Aids in relation to global health - a preoccupation of both our governments.

We of course discussed the issues to do with weapons of mass destruction and the threat that it poses. The Middle East and the Middle East peace process. And since we have successive G8 chairmanships in the next couple of years, we also discussed how we might use those to make progress on all these issues, including some of the challenging and difficult issues to do with climate change, world trade and poverty.

So once again, Mr President, welcome here. It is a very, very great pleasure and honour to have you here in our country. We are delighted to see you. Thank you for that magnificent speech yesterday, and it is my pleasure to ask you to address the assembled gathering.

President Bush: Thank you Mr Prime Minister. It is my honour to be standing by the side of a friend, and Laura and I were so honoured to be invited by Her Majesty The Queen to come to the United Kingdom for this state visit. It has been a fantastic experience for us.

I also want to express my deep sympathy for the loss of life in Turkey. The nature of the terrorist enemy is evidenced once again. We see their contempt, their utter contempt, for innocent life. They hate freedom, they hate free nations. Today once again we saw their ambitions of murder. The cruelty is part of their strategy. The terrorists hope to intimidate, they hope to demoralise, they particularly want to intimidate and demoralise free nations. They are not going to succeed. Great Britain and America and other free nations are united today in our grief and united in our determination to fight and defeat this evil wherever it is found.

Britain and America have suffering caused by terrorism before. September 11 2001, no country, except America, lost more lives than Britain. Since that day no ally has accomplished more, or sacrificed more, in our common struggle to end terror, and we are grateful.

Our shared work at democracy in Afghanistan and Iraq is essential to the defeat of global terrorism. The spread of freedom and the hope it brings is the surest way in the long term to combat despair, and anger, and resentment that feeds terror. The advance of freedom and hope in the greater Middle East will better the lives of millions in that region, and increase the security of our own people.

I have just come from a meeting with families of British servicemen who were killed in Iraq. These brave men died for the security of this country and in the cause of human freedom. Our nations honour their sacrifice. I pray for the comfort of the families.

Our mission in Iraq is noble and it is necessary. No act of thugs or killers will change our resolve or alter their fate. A free Iraq will be free of them. We will finish the job we have begun. Together Great Britain and the United States met the defining challenges of the last century. Together we are meeting new challenges, challenges that have come to our generation. In all that lies ahead in the defence of freedom, in the advance of democracy, our two nations will continue to stand together.

I am honoured to be here Mr Prime Minister. I thank you for your leadership and your friendship.

Question: Could I ask both leaders about the agenda on Iraq. You are both engaged in an unpredictable and dangerous war, as we have seen today, and yet you say you want to bring the troops home, starting from next year. Now how is that possible when the security situation is still so unresolved? You haven't got Saddam Hussein. Aren't you stuck in Iraq with your enemies holding the exit door?

President Bush: I said that we were going to bring our troops home starting next year? What I have said is that we will match the security needs with the number of troops necessary to secure Iraq, and we are relying on our Commanders on the ground to make those decisions.

Question (Andrew Marr, BBC): So you can keep the same number of troops in Iraq for a longer time?

President Bush: We could have less troops in Iraq, we could have the same number of troops in Iraq, we could have more troops in Iraq, what is ever necessary to secure Iraq.

Prime minister: And let me make it absolutely clear for our position as well. We stay until the job gets done. And what this latest terrorist outrage shows us is that this is a war, its main battleground is Iraq. We have got to make sure that we defeat these terrorists - the former Saddam people - in Iraq and we must do that because that is an essential part of defeating this fanaticism and extremism that is killing innocent people all over our world today. And I can assure you of one thing, that when something like this happens today, our response is not to flinch, or give way or concede one inch. We stand absolutely firm until this job is done, done in Iraq, done elsewhere in the world.

President Bush: Andy, if I may have a follow-up - this is kind of a new thing, a follow-up to the answer. One thing that is happening that you need to know that will help us make the necessary calculations for troops levels, is that there are a lot of Iraqis beginning to be trained to deal with the issues on the ground. There are Iraqis being trained for an army, there are Iraqis being trained for intelligence services, there are Iraqis being trained for additional police work, there are Iraqis being trained for asset protection, there are Iraqis being trained for border guards. There are over 130,000 Iraqis now who have been trained, who are working for their own security. And part of the answer to your question is how fast the new brigades of Iraqi Army, how effective they are. We believe that the Iraqi citizens want to be free. We know that they are willing to work for their own freedom, and the more people working for their own freedom, the more we can put that into our calculation as to troop levels. Thank you for letting me butt in there again.

Question: For both of you, Mr President and Mr Prime Minister. The attacks today, do you view them as a direct attack on the alliance, and does the fact that these attacks are coming with an increasing intensity and randomness, does that make it less likely that you will be able to turn over sovereignty to an Iraqi council by June?

President Bush: Well, first of all in Iraq we are working on two tracks: we are working on a political track and we believe that the timetable that the governing council has set for itself is an accurate timetable, and we will work with the governing council to turn over sovereignty. It is their decision, and we agreed with their decision, based upon the conditions on the ground, and some of those conditions were the fact that there wasn't the sectarian violence that was predicted, Iraq remained intact, there wasn't the mass refugee flows that had been predicted, there wasn't the starvation that had been predicted. In other words, the conditions on the ground were such that the governing council felt like they could move forward in a constructive way, and we supported that. Secondly, these terrorist attacks are attacks on freedom and they attack when they can, and our job is to secure our homelands and chase down these killers and bring them to justice, and we are making good progress with al-Qaida, and if you were to view al-Qaida's organisation structure as a kind of board of directors, and then there would be the operating management, we are dismantling the operating management, one person at a time

We are on an international manhunt and that is why relations and cooperation between our intelligence services are essential to secure the people of our respective countries. And I will tell you the prime minister's cooperation has just been unbelievably good, as has the intelligence service of Great Britain - a fine group of people by the way, people who are dedicating their lives to the security of the people of this great country. And the more we share intelligence with other nations, the more likely it is that we will be able to rout out these terrorists. That is why the phone call I had with Prime Minister Erdogan was an important phone call, when I assured him we are willing to work with the Turkish government, as are the Brits willing to work with the Turkish government to share information and to find these killers so they don't kill again. I don't know the nature of the casualties today, but I do know the nature of the casualties in the recent attack in Istanbul, more Muslims died in that attack. These are al-Qaida killers killing Muslims, and they need to be stopped, and we will stop them.

Prime minister: Here is where we have got to. We have got to see what this struggle is about, because you can see it clearer and clearer day by day. This is a struggle between fanaticism and extremism on the one hand, and people who believe in freedom and tolerance on the other. And these attacks have been building for years, they came to their height, okay, on September 11, but that actually wasn't the first attack that al-Qaida was perpetrating against America and other countries, and you look round the world today and I tell you in virtually every place there is trouble and difficulty, these terrorists are making it worse, whether it is Kashmir, whether it is Palestine, whether it is Chechnya, wherever it is, and they are prepared to kill anyone, they are prepared to shed any amount of bloodshed, because they know how important this battle is.

And here is why Iraq is important in this, because in the end their case, which is based on dividing people, the Arab world and the western world, the Muslim world and the Christian world and other religions, their case is that we are in Iraq to suppress Muslims, steal their oil, to spoil the country. Now we know, you know, that all those things are lies. They know therefore that if we manage to get Iraq on its feet as a stable, prosperous, democratic country, the blow we strike is not just one for the Iraqi people, it is the end of that propaganda and that is why they are fighting us.

And when you say is this attack today directed at our alliance, it is directed at anybody who stands in the way of this fanaticism. And that is why our response has got to be to say to them as clearly as we possibly can, you are not going to defeat us because our will to defend what we believe in is actually in the end stronger, better, more determined than your will to inflict damage on an innocent people. Now that is what this whole thing is about. That is why when I hear people talking about the alliance between our two countries, this is not an alliance that is based on simply Britain and America and the ties that go back in history and all the rest of it, this is a real living alliance about the struggle going on today in the early 21st century, and if we don't win this struggle, it is not just Britain and America that is going to suffer, people everywhere are going to suffer, and that is why it is important.

And if they think that when they go and kill people by these terrorist attacks they are going to somehow weaken us or make us think well let's shuffle to the back of the queue and hide away from this, they are wrong, that is not the tradition of my country and it is not the tradition of the British people or the American people.

Question: What do you say to those people, both those who support what your two governments have done since September 11 and those that oppose it, that in fact the treatment of the captives in Guantanamo Bay actually belies all your talk of freedom, justice and tolerance? And on a specific point, in view of the comments from the secretary of state and from Charles Kennedy and from Michael Howard, is there on the minority of British nationals who are captive an explicit offer from the United States to repatriate them, and if that depends on a request from you prime minister, are you prepared to make it now?

Prime minister: First of all let me just deal with the very specific issue of the British nationals over in Guantanamo Bay. We are in discussion about this. I have already said in the House of Commons it will be resolved in one of two ways: either they will be tried by the military commission out there, or alternatively they will be brought back here. Now we are in discussion at the moment.

Question: Inaudible

Prime minister: It will be resolved at some point or other. It is not going to be resolved today, but it will be resolved at some point soon. Let me just say this to you however about Guantanamo Bay, indeed the people that are there. Again, let's just remember this arose out of the battle in Afghanistan, that arose out of September 11 and the attack there. And the very fact that we are in discussion about making sure there are fair procedures for trial, or alternatively it is up to us, as the president has said, these people come back here, is an indication that we actually treat people differently. So even though this arose out of this appalling brutal attack on America on September 11, nonetheless we make sure that justice is done for people.

President Bush: Yes, justice is being done. These are illegal non-combatants picked up off of a battlefield, and they are being treated in a humane fashion and we are sorting through them on a case by case basis. There is a court procedure in place that will allow them to be tried in fair fashion. As to the issue of the British citizens, we are working with the British government.

Questions: Mr President and Mr Blair, how accurate would it be to conclude that the new China trade quotas, along with a weakening dollar and your disagreement with the WTO on steel, altogether constitute a re-election strategy of boosting US exports at the expense of free trade principles? And Mr Blair, I would like to know how these policies are affecting Europe and the UK.

Prime minister: Mr President, I think you should answer that one first.

President Bush: My administration is committed to free trade, the first administration in a long time to achieve trade promotion authority from the Congress, and we are using that to promote free trade agreements on a bilateral basis, a hemispheric basis, and we are strongly advocating a successful Doha round of the WTO. Secondly, free trade agreements require people honouring the agreements, and there are market disruptions involved where certain Chinese textiles, we are addressing those disruptions, and we look forward to visiting with our Chinese counterparts on this particular matter. And as I have been saying publicly, that free trade also requires a level playing field for trade. In terms of the steel issue, it is an issue that the prime minister has brought up, not once, not twice but three times. It is on his mind, it is also on my mind, and I am reviewing the findings about the restructuring of our steel industry. The ITC ruling basically said that the industry needs some breathing time to restructure. I am looking at the findings right now and will make a timely decision. But I will reiterate, we believe strongly in free trade. I just want to make sure that free trade is also a trade in which all parties are treated fairly.

Prime minister: Obviously, we have stated our position, and I know the president is well aware of it, and as you have just heard the administration will make its decision in the coming period of time. The other thing I would draw your attention to is the joint belief in the importance of the WTO doing well and getting the deadlock that there was at Cancun resolved. That is immensely important. And never forget incidentally - I said this in the House of Commons yesterday - whatever the disagreements on trade between Europe and America, and ever since I have been prime minister there have been such disagreements on particular issues, but the trade between Europe and America is vast, in fact I think it is right to say that it has doubled since 1989. It amounts to a huge amount of money and jobs both ways every single year. So that is not to say we don't have to resolve these issues, and I hope we can resolve them soon, but I don't think we should forget the bigger picture either.

Question: What do you say to people who today conclude that British people have died and been maimed as a result of you appearing here today, shoulder to shoulder, with a controversial American president? And Mr President, if I could ask you, with thousands marching on the streets today here in London, a free nation, what is your conclusion as to why apparently so many free citizens fear you and even hate you?

President Bush: I would say freedom is beautiful. It is a fantastic thing to come to a country where people are able to express their views.

Question: So why do they hate you in such numbers?

President Bush: I don't know that they do. All I know is that people in Baghdad for example weren't allowed to do this up until recent history, and they are not spending a lot of time in North Korea protesting to current leadership. Freedom is a wonderful thing, and I respect that. I fully understand people don't agree with war, but I hope they agree with peace, and freedom, and liberty. I hope they care deeply about the fact that when we find suffering, and torture, and mass graves, we weep for the citizens that are being brutalised by tyrants. And finally, the prime minister and I have a solemn duty to protect our people, and that is exactly what I intend to do as the president of the United States - protect the people of my country.

Prime minister: To answer your first question, and your other indeed, people have the right to protest and to demonstrate in our countries and I think that is part of our democracy, and all I say to people is, and this is the importance I think of the speech the president made yesterday, listen to our case as well.

We listen, that is what a democratic exchange should be about, but listen to the case that we are making, because there is something truly bizarre about a situation where we have driven the Taliban out of government in Afghanistan, who used to stop people going about the street as they wished, who used to prevent girls going to school, who brutalised and terrorised their population. There is something bizarre about having got rid of Saddam in Iraq from the government of Iraq, when we have already discovered just so far the remains of 400,000 people in mass graves, there is something bizarre about these situations happening, and people saying that they disagree when the effect of us not doing this would be that the Taliban was still in Afghanistan and Saddam was still in charge of Iraq.

And I think people have got to accept that that is the consequence of the position they are in. Now as for your first point, just let me say this. What has caused the terrorist attack today in Turkey is not the president of the United States, is not the alliance between America and Britain, what is responsible for that terrorist attack is terrorism, are the terrorists. And our response has got to be to unify in that situation, to put the responsibility squarely on those who are killing and murdering innocent people, and to say we are going to defeat you and we are not going to back down or flinch at all from this struggle, for all the reasons I have given you earlier.

This is what this struggle is about. And when you look, as you can see from the list, people from 60 different nationalities who have died in terrorist attacks, you know thousands of people from every religion, every part of the world, you are not going to stop these people by trying to compromise with them, by hesitating in the face of this menace. It is defeat them or be defeated by them, and that is what we are going to do.

Question: Mr President, when you talk about peace in the Middle East, you have often said that freedom is granted by the Almighty

Some people who share your beliefs don't believe that Muslims worship the same Almighty. I wondered about your views on that. And Mr prime minister, as a man also of faith, I would like to get your reaction to that.

President Bush: I do say that freedom is the Almighty's gift to every person, I also condition it by saying freedom is not America's gift to the world, it is much greater than that of course, and I believe we worship the same God.

Prime minister: And I believe that if people are given the chance to have freedom, whatever part of the world they are in, whatever religion they practice, whatever faith they have, if they are given the chance to have freedom, they welcome it. And I think it is the most appalling delusion that actually affects some people even within our own societies that somehow, though we in our countries love freedom and would defend freedom, somehow other people in other parts of the world don't like it.

And the reason why they like freedom is because then, if you have got freedom, and democracy and the rule of law, you can raise your family, you can earn a decent standard of living, you can go about your daily business without fear of the secret police or terrorism, and in those types of societies, the terrorists who thrive on hatred and fanaticism, they get no breeding ground, they get no breeding space.

And the really important thing, and I just want to say this about the president's speech yesterday, because I hope, people sometimes say to me well you have got a Republican president, a centre-left government here in Britain, how can you two guys work together? On this issue I believe that people, from whatever side of the political spectrum they are on, can respond to the call that in the end the best security we can have is not just through our armed forces and intelligence services, magnificent though they are, but actually through our values, through the spread of those values of freedom, and justice and tolerance throughout the world.

And the case the president made yesterday I think is a really powerful call, not just to people in our own countries, but to people right throughout the world, that these are basic human values, they are not in the ownership exclusively of America, or Britain, or the west, or any particular religion, it is their human values. And actually every time you give people the chance to have those values, they opt for them, of course they do, because they are the values that sustain the human spirit.